Microsoft signs ARM deal

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Chip maker ARM has confirmed that it has signed a licensing agreement with Microsoft, bringing with it the possibility that Microsoft could be looking to design its own chips in future, just like Apple.

Although both companies have worked with each other on a chip by chip basis, it means that Microsoft now has full access to ARM architecture.

"With closer access to the ARM technology we will be able to enhance our research and development activities for ARM-based products", Microsoft general manager, KD Hallman, told Reuters.

While the actual contract was only thought to be worth around $10m, Microsoft’s move boosted hopes that future versions of Windows will run on Arm-powered hardware, as the company looks to support it as well as Intel powered devices.

An Arm-compatible version of Windows “may already be complete and sitting in a lab at Microsoft”, Citigroup told the FT, speculating that Microsoft was planning a long-term response to Apple’s successful iPad launch. “Any Microsoft chip would not be expected to market for another two to three years but this move has significant long-term positive implications for Arm’s future share of the mobile chip market”, it said.

Many believe that Microsoft could also use the chips in a next generation Xbox 360 console or mobile phones, although the latter is unlikely.

Other banks have been falling over themselves to give quotes too; RBS has gone on record saying that the move “could be a game changer” for Arm, giving it access to the 400m-plus unit PC and laptop markets.

The decision from Microsoft follows Apple's lead which has moved away from just buying chips, but designing them as well. It designed the A4 chip in-house based on the ARM Cortex-A8 core. The A4 chip is in Apple's iPad tablet computer and the iPhone 4, but expected to make it into future devices, possibly a new Apple TV.